The announcement was loud and proud: March’s nonfarm payrolls expanded by 196,000 and the U.S. unemployment rate held steady at 3.8%. Typically reactive financial media talking heads immediately starting crowing about how their doubts are now dispelled and the decade-long economic expansion cycle can continue unabated.
The collective sigh of relief from the government, the central bank, and the corporate press was audible. After February’s jaw-droppingly anemic gain of just 20,000 American jobs, March’s released numbers were heralded as the greatest news ever – or at least, good enough to continue the easy-money-policy machine going for a while longer.
CUNA Mutual Group’s Steve Rick, for instance, was beaming with excitement: “With a strong March employment report now in the books, we’ve gotten some reassurance that the labor market is still strong.”
Chris Gaffney, president of world markets at TIAA Bank, was similarly elated: “The 196,000 jobs added in March shows the U.S. economy is not stalling out… This was a perfect report for equity investors as it shows the U.S. economy is still marching along.”
Apparently Rick, Gaffney, and the other professional jawboners didn’t read the memo that arrived literally 24 hours prior: a report from outplacement firm Challenger, Gary & Christmas revealed that layoffs hit 190,410 in the first quarter of 2019 – 35.6 percent increase over the previous year and the worst first quarter since 2009.
The total number of job cuts reached 190,410, a 10.3 percent increase from Q4 of 2019 and a 35.6 percent increase from the same period a year ago. This represents the worst quarter since the Q3 of 2015 and the highest level of job cuts for a first quarter since 2009, when the nation was mired in the financial crisis.
Hardest hit were the auto industry with 8,838 layoffs, followed by the energy sector with 8,149 job cuts. Other disheartening (but of course, underreported) employment-related news came via a report Wednesday from ADP and Moody’s Analytics, which revealed that private payrolls grew by just 129,000 in March, an 18-month low.
Challenger, Gray & Christmas Vice President Andrew Challenger drew a stark conclusion from the data: “Companies appear to be streamlining and updating their processes, and workforce reductions are increasingly becoming a part of these decisions… Several indications, such as the number of companies filing for bankruptcy or closing operations, suggest we’re heading for a downturn.”
As for the Bureau of Labor Statistics’ optimistic report, much of the corporate media neglected to mention that 6,000 jobs were lost in the manufacturing sector in March; wage gains fell well below expectations, having flatlined at just +0.14% for the month; and that the labor force participation rate declined to 63%, down 0.2 percentage points to its lowest level since November.
Digging beneath the surface and bypassing all the rhetoric, we find that the reality is much grimmer and grittier than the smiles and sunny outlook we see on television. No manipulation of the statistics can mask the fact that today’s Americans are facing a tight labor market, with a million more job openings than there are eligible workers to fill them.
That’s in stark contrast to the fantasy that the nation’s employers are absolutely scrambling to fill job positions and that skilled workers have the luxury of being selective and demanding. The fact is, job postings have decreased significantly this year: according to popular employment portal Glassdoor, the first quarter of any given year typically sees about a 5% to 15% increase over the previous year, but 2019 has been flat.
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Andrew Chamberlain, Glassdoor’s chief economist, noted that this startling phenomenon isn’t limited to just one sector of the job market: “I think that’s quite unusual. Digging into sectors behind it, it’s fairly broad-based”; Chamberlain’s conclusion is that “the economy is flashing a yellow light.”
If anyone’s being selective and demanding, it’s the employers, not America’s workers or job seekers. A trend towards training current employees rather than hiring new ones has made it increasingly difficult for job applicants to get their foot in the door and break the vicious cycle of unemployment.
Jason Cagle, SunTrust’s head of commercial banking, basically admits this, even while putting a positive spin on it: “We’re seeing people get really creative with how they make sure they have the right team on the field. It’s no longer just about going out and trying to find it.” The subtext: don’t bother applying for a job here – we’ll just work with the employees we’ve already got.
And there’s one other little detail in the Bureau of Labor Statistics’ report that practically everybody missed: baby boomers (the 78 million Americans born from 1946 through 1964) and seniors had an absolutely horrendous month in March in terms of employment. In particular, employment for people 55 and older dropped 209,000 last month, the biggest such decline since February 2015.
Courtesy: Bureau of Labor Statistics, cnbc.com
It’s the demographic segment that the media completely ignored: even with the worst fall-off in employment in four years, no one seems to be reporting adequately on the financial struggles of a generation that can’t afford to stop working but fears getting squeezed out of the workforce by younger, tech-savvy college grads who are willing to do the same work for less pay.
The findings are truly disconcerting: a recent report from the U.S. Government Accountability Office declared that 48 percent of individuals over the age of 55 have no savings in a workplace retirement plan or in an IRA. In this day and age, America’s seniors are working not just because they want to, but because they have to.
But in the current job market, finding gainful employment is easier said than done for America’s seniors, who face not only the universal issues of automation and outsourcing but the addition problem of age discrimination perpetrated by employers who (incorrectly) assume that seniors lack modern technological skills.
That’s not reported in the government’s employment announcement, though, as they continue to burnish the exterior of the American jobs market and, more broadly, the economy and markets which will eventually be forced to come to terms with what scarcely anyone’s willing to deal with: reality.
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